Arthritis conditions are widely treated with oral nonsteroidal anti-inflammatory drugs, yet long-term therapy is often limited by gastrointestinal toxicity and variable systemic exposure. To overcome these issues, an injectable thermosensitive chitosan/β-cyclodextrin- graft -poly(N-isopropylacrylamide) hydrogel was developed as a subcutaneous depot for sustained diclofenac sodium delivery. The hydrogel was synthesized via free-radical polymerization using glutaraldehyde as a crosslinker. FTIR and 1 H NMR confirmed network formation and drug incorporation, while DSC, TGA, and DTG analyses demonstrated enhanced thermal stability. SEM revealed a porous, interconnected structure, and EDX mapping verified uniform drug distribution. Rheological and swelling studies indicated shear-thinning behavior, good injectability at room temperature, rapid sol–gel transition at 37 °C, and reversible temperature-responsive swelling. In vitro release, with profiles best fitted by the Korsmeyer–Peppas model, indicating a non-Fickian diffusion–relaxation mechanism. Enzymatic degradation confirmed sufficient structural stability to support drug release for more than 10 days. HET-CAM and hemolysis assays demonstrated good biocompatibility. In vivo studies showed reduced peak plasma concentration, prolonged T max , mean residence time, and half-life, with an approximately three-fold increase in relative bioavailability compared with the control, supporting depot-like sustained release. Overall, this thermosensitive hydrogel represents a promising platform for controlled and sustained subcutaneous drug delivery.